NBN Co shrinks HFC footprint, expands FTTN rollout

Time running out for more funding.

NBN Co will take around 1.2 million premises out of the hybrid-fibre coaxial (HFC) footprint and move them to its fibre-to-the-node network in an effort to reduce its costs.

The network builder today revealed its new three-year corporate plan, its first to outline the rollout to expected completion in 2020.

In a marked change from previous plans, the new document reveals the HFC footprint will be cut back from a previous estimated 4 million premises to between 2.5 million and 3.2 million, with an expected final number of 2.8 million.

It gives the combined FTTN footprint a premise count of between 5.1 million and 6.5 million, the vast majority of the total 11.9 million-premise network.

NBN Co CEO Bill Morrow said the network builder had gained greater insight into the state of its acquired Telstra and Optus HFC networks throughout the year, allowing it to make more detailed planning decisions.

"[Last year] we didn't have contracts in place with equipment suppliers and delivery partners .. and we lacked a lot of the data associated with exchange information from Telstra and Optus. We've been able to close all of that out through the year," Morrow said.

"The data that is available today changed the type of technology we should choose."

That technology allocation would likely change further as NBN Co accesses more detailed network information, the new corporate plan indicated.

NBN Co expects the cost per FTTN and HFC premise to both sit at $2300.

It had previously estimated the HFC cost per premise to be $1800, but revised that figure up this year due to "further understanding of of network planning and design" as well as the move to DOCSIS 3.1 and to a demand drop to build drop model for lead-ins.

The network builder will reach its $29.5 billion peak government funding cap before the end of its curent FY17 financial year.

It is expecting the rollout to cost at least $49 billion by 2020, but is planning for a maximum of $54 billion. Its latest corporate plan has revised down the peak funding amount from a previous estimated $56 billion to $54 billion.

When the current funding pool runs out at the end of FY17, NBN Co will need to raise around $10 billion within 12 months to meet its expected requirement of of $39.5 billion in funding for FY18.

Morrow today would only say that the network builder was in the process of securing external debt "as we speak right now".

"We are confident we'll be able to obtain the necessary funds," Morrow said.

"It's still in progress. We've already contacted the credit rating agencies, which is naturally the first step in raising any sort of debt. That process is underway at the moment."

The federal government said it would not increase its $29.5 billion funding cap last August when NBN Co revealed its construction costs would blow out past the originally estimated $41 billion to as much as $56 billion.

NBN Co expects to be bringing in $5 million in revenue within four years, but it doesn't expect to be cash flow positive until 2020 thanks to payments to Telstra and Optus that compensate them for losing fixed line customers.

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